KT&G, AmorePacific stress overseas expansion at shareholder meetings

Chairman Shin Dong-bin enters Seoul Central District Court in southern Seoul, on Feb. 13. / Yonhap

Lotte to focus on strengthening chairman's grip, CJ to embrace new faces on board

By Nam Hyun-woo

LG H&H CEO Cha Suk-yong

With the season of shareholder meetings in full swing, companies, which have finished the annual gathering, stressed the importance of expanding overseas and nurturing new growth engines. Others yet to have their meetings are eying either consolidating the current leadership or seeking a generational shift.

LG Household & Healthcare (LG H&H), AmorePacific, KT&G and Shinsegae have finished as of Sunday. Lotte Shopping, which has Lotte Department Store, Lotte Mart and Lotte Supermarket under its wing, and Hyundai Department Store Group will hold their general shareholder meetings on Feb. 23. Another retail giant CJ Group's listed affiliates will have shareholder meetings from Feb. 26 to 28.

LG H&H had an amicable shareholder meeting. During the meeting Friday, LG H&H shareholders agreed to the appointment of a new director and approved the 2017 accounting books.

“Despite harsh business conditions last year, our Whoo and su:m brands handsome performances and our solid onshore business in China brought us noticeable results,” LG H&H CEO Cha Suk-yong said during the meeting.

LG H&H overtook AmorePacific last year to become the No. 1 cosmetics company in Korea. Despite headwinds last year, such as a sharp decline of inbound Chinese traffic, its luxury brands and robust sales in the Chinese market led LG H&H's surprising surge.

“This year will also not be easy,” Cha said. “But we will pursue becoming the leader of the Asian market through preemptive risk management and innovations in research and development.”

AmorePacific President Ahn Sae-hong

AmorePacific, which lost the throne to LG H&H, also suggested overseas markets as its next move.

President Ahn Sae-hong said during its shareholder meeting that “AmorePacific will accelerate its overseas expansion for improvements.”

“We will roll out new brands in the U.S. and ASEAN markets and will enter the new markets of the Middle East and Australia,” he said.

Before the meeting, a number of outside institutions opposed reappointing the AmorePacific Chairman Ahn and newly appointed members of the board of directors, but shareholders agreed to give them their seats.

Tobacco maker KT&G also stressed the importance of overseas markets. During their meeting on Friday, shareholders approved the reappointment of CEO Baek Bok-in, despite opposition from a major shareholder -- the Industrial Bank of Korea.

“With aggressive overseas expansion, KT&G will consolidate its position as a global enterprise,” Baek said during the meeting.

KT&G CEO Baek Bok-in

“I will also maximize value for shareholders by establishing a balanced business portfolio with red ginseng, pharmaceuticals, cosmetics and real estate, as well as entering new markets including Africa and Central America.”

On the other hand, Shinsegae Department Store celebrated its Gangnam branch becoming the No. 1 department store in Korea by sales, adding that finding the new growth engine will help it keep the momentum.

“This year, Shinsegae will break the limit of retail businesses and become a company that keeps changing,” Shinsegae CEO Jang Jae-yong said during its shareholders' meeting on Friday. “We will come up with new stores that are far different from conventional department stores.”

Making a more dramatic shift of focus was the GS Retail convenience store and supermarket chains. GS Retail shareholders on Friday approved adding virtual reality (VR) to the company's business purpose.

This is in line with its recent partnership with KT over opening a VR arcade called “Vright” in Seoul. They also plan to open 200 more VR venues by 2020 and reach 100 billion won in sales.

Consolidation vs. new generation

Other retail giants are having agendas on their board seats. Lotte Shopping will hold its shareholders' meeting on Feb. 23, with the reappointment of Lotte Chairman Shin Dong-bin as a board director standing as a highlight.

Shin was the president of the Lotte Shopping board from 2006 to 2015. After stepping down from the post, he has been one of the internal directors of the board.

Raising a question is Shin's absence. Last month, the Seoul Central District Court sentenced Shin to two-and-a-half years in prison for giving a 7 billion won bribe to a foundation run by former President Park Geun-hye's confidant Choi Soon-sil, as Shin sought favors in winning a government license to run duty free businesses in Seoul.

After he was imprisoned, Shin left Lotte's businesses in Japan, resigning from the executive director post of Tokyo-based Lotte Holdings.

However, he retained director posts at Lotte companies in Korea, with observers saying he will try not to lose grip on Lotte Shopping, and that shareholders will likely vote for him.

On the same day, Lotte Confectionery will hold its meeting to vote on Shin's reappointment as a board member.

From Feb. 26, 10 listed CJ companies will hold shareholder meetings. In those meetings, CJ Chairman Lee Jay-hyun will not return to the boards of those companies. Lee was on the board of CJ affiliates until he was jailed in 2013, but resigned from all CJ affiliates' boards until 2016.

CJ said Lee will not return to the board due to health issues and will focus on drawing long-term strategy for the group.

Instead, CJ Corp., holding company of CJ Group, will have Vice Chairman Lee Chae-wook resign from the board and appoint two vice presidents in their 50s as new board members.